How does revenue-based financing work?
Leverage everyday transactions to fund your next big move.
Imagine this: The perfect second location for your business has just become available in exactly the neighbourhood you’ve been eyeing for months. It’s too good to pass up, but there’s just one problem. Your cash flow is already tied up running the location you already have.
It's a familiar challenge for small businesses looking to innovate and scale. The investments that can help drive growth often require upfront capital, whether that’s opening a new location, upgrading technology and equipment, hiring more staff, launching an important marketing campaign, or stocking up on inventory ahead of a busy season. The strategy may be sound, but the cash isn’t always at your fingertips.
The good news is that there are options, and one of them may already be hiding in your daily sales through revenue-based financing (RBF). For the right business and the right project, it can help you say yes when the right opportunity comes along.
How does revenue-based financing work?
Unlike a traditional business loan, RBF gives you up-front capital that’s repaid through a fixed percentage of your daily sales until your balance is cleared.
The repayment percentage stays the same, but the amount of each payment varies with your revenue. When you’re busy, a larger share goes toward your balance. When business is slow, you naturally pay less.
Some RBF providers are quicker to approve and deliver your financing than traditional loans. This faster turnaround puts capital in your hands within days, allowing you to invest in growth opportunities, such as purchasing inventory, upgrading equipment, renovating a space, hiring staff, expanding into a new location or increasing marketing efforts.
Is RBF right for your business? The pros and cons
Revenue-based financing
- Repayment: Payments are tied to your sales, which means you pay less when sales are slower.
- Cost: The amount you repay is agreed up front, including a set fee, so you know the total from day one. You won’t pay interest, so your balance remains the same regardless of when you pay it off.
- Best for: Businesses with steady, predictable sales that want to invest in growth projects.
Traditional bank loans
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Repayment: Fixed monthly payment schedule means you always pay the same amount, regardless of sales.
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Cost: Interest accumulates over time, so paying it off early can save you money.
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Best for: Major long-term expansions or businesses that don't rely heavily on daily transaction volume.
How to leverage future sales to finance growth
Revenue-based financing can provide critical access to funding, but it’s important to use that money strategically. Here are a few ways to get the most value from it.
- Start with projects that drive sales quickly. Think buying inventory in bulk at a discount or upgrading to equipment that boosts efficiency. The aim is to build your business, not just cover the cost of the financing.
- Borrow an amount that fits your sales. Since repayment is tied to your revenue, look at how steady your card sales tend to be and choose an amount you can comfortably repay.
- Keep track of repayments. Some RBF providers deduct repayments automatically from each of your daily card sales. Make sure your accounting software is tracking these transactions to keep your cash-flow picture accurate and your month-end free of surprises.
Choose the right partner
A few simple questions can tell you a lot about a finance provider and help you find the option that works best for your business.
- Start with the numbers. Ask how much you’ll repay in total, not just the percentage being deducted from sales. It can also be helpful to understand whether there are any application, administration or processing fees.
- Focus on how the financing works. What percentage of sales goes toward your repayment? What happens if sales slow down for a prolonged period? How quickly can funding be approved and delivered?
- Assess how well the financing aligns with the way you already operate. Some providers connect directly to the payment systems businesses use every day, which can simplify and streamline the process.
If you already take payments through Clover’s all-in-one POS systems, Clover Capital is a fast and easy way to access the funds you need, with clear payback terms that give you the flexibility to grow your business. There’s no interest rate, no fixed term and no fixed payment amount. Approval typically takes one to two business days, and you’ll see funds in your bank account two to three business days after that.
How can we help?
If you'd like to learn more about Clover Capital and how it can help fund your next business investment, please contact your Clover Business Consultant. Clover can also help you accept payments, run your business, and sell more. Follow us on Facebook and Instagram.
This information is intended solely for informational purposes and should not be interpreted as legal, financial, or tax advice. Readers are strongly advised to consult with their attorneys, financial advisors, or tax professionals to obtain guidance tailored to their specific circumstances.